Chris Huhne takes solar subsidy cuts ruling to the court of appeal

Written By MR on Monday, January 16, 2012 | Monday, January 16, 2012

The government has made an urgent challenge to a judge's decision that halving feed-in tariffs was an 'unlawful decision'

The government went to the court of appeal on Friday in an urgent attempt to overturn a high court ruling that has hit its plans to cut subsidies for solar panels on homes.

The energy secretary, Chris Huhne, wants to reduce feed-in tariff (Fits) subsidies – payments made to households and communities that generate green electricity through solar panels – on any installations completed after 12 December last year.

Just before Christmas, a judge ruled that the minister was "proposing to make an unlawful decision".

Mr Justice Mitting's decision was a victory for environmental campaigners Friends of the Earth (FoE) and two solar companies – Solarcentury and HomeSun – who said the plans to halve subsidies were creating "huge economic uncertainty".

FoE's executive director, Andy Atkins, said the government's proposed cuts had "cast a huge shadow over the solar industry, jeopardising thousands of jobs".

But today Huhne will ask three appeal judges – Lord Justice Lloyd, Lord Justice Moses and Lord Justice Richards – to hear his challenge to the high court ruling as a matter of urgency.

A spokesman for the Department of Energy and Climate Change (Decc) said an appeal was necessary "so that we can provide clarity for consumers and industry on the way forward".

The government wants to rush tariff reductions because it believes the current subsidies are too generous and will "severely deplete resources for future solar PV generators, or for other technologies".

In a ruling in December, Mitting said it would be unlawful for the energy secretary to carry out his plan to implement the cuts in April this year by referring back to the 12 December deadline last year, which had fallen in the middle of a consultation period.

The judge said Huhne was entitled to make modifications for "the statutory purpose" of promoting small-scale, low-carbon electricity-generating schemes.

But changes made by reference to the earlier date of 12 December "are not in my judgment calculated to further that statutory purpose".

He added: "On the contrary, they will tend to undermine the confidence of those participating in the market for small solar systems."

He observed that a significant capital outlay was required to install solar panels, and the payback for that investment under the Fits scheme was over 25 years.

Decc argues that the judge has misunderstood the position.

A department spokesman said after the high court ruling that the overriding aim of the proposed reduction was to ensure "that over the long term as many people as possible are encouraged to install small-scale low-carbon generation (including other technologies as well as solar PV) and benefit from the funding available for the Fit scheme.

"Without an urgent reduction in the current tariffs, which give a very generous return, the budget for the scheme would be severely depleted and there would be very little available for future solar PV generators, or for other technologies.

"Our view is that the urgent steps we have proposed to protect the scheme for the future are fully consistent with the scheme's statutory purpose."

Decc also argues that the judge's ruling was premature "as no decision has yet been taken, and a decision will only be taken after a full analysis of the responses to the consultation".